Stocks posted solid gains Wednesday after Federal Reserve Chairman Jerome Powell reiterated the central bank will continue its support of the U.S. economy.
The Dow Jones Industrial Average rose 439 points, or 1.39%, to 31,976, and set an intraday record high during the session. The S&P 500 was up 1.17% and the tech-heavy Nasdaq reversed losses to gain 0.87%.
Bond yields surged after Powell’s pledge of continued economic support.
The 10-year Treasury yield traded at 1.377% on Wednesday, but had risen earlier to 1.435%, the highest since February 2020. Thirty-year yields reached 2.25%, the highest since January 2020.
Powell reiterated to lawmakers Wednesday that the central bank was a long way from scaling back its ongoing economic support.
The Fed chief also said interest rates would remain low as he noted the economic recovery “remains uneven and far from complete.” Powell signaled the central bank won’t soon begin tapering the $120 billion of bonds it has been buying per month until “substantial further progress” was achieved.
Powell said higher bond yields were a reflection of investors’ confidence in an economic recovery, not concerns about inflation. Powell said the Fed does expect inflation to rise but central bank has “the tools to deal with it.”
Powell was speaking Wednesday before the House Financial Services Committee.
Investors, however, have been having a hard time lately shaking those fears over rising inflation and higher borrowing costs with President Joe Biden’s $1.9 trillion stimulus bill likely to pass and vaccine distribution across the country improving.
Tesla (TSLA) – Get Report was rising 4.36% Wednesday following reports that Cathie Wood’s Ark Investment funds bought more than $170 million of shares in the electric vehicle maker during Tuesday’s selloff.
Johnson and Johnson (JNJ) – Get Report traded up 1.99% after staff at the Food and Drug Administration said the company’s COVID-19 vaccine was safe and effective ahead of a meeting Friday on the vaccine’s emergency use authorization.
Bitcoin rose Wednesday to $49,582 after tumbling to $45,000 in the previous session. The cryptocurrency was getting a boost from Ark Investment’s Wood, who told Bloomberg she was “very positive on bitcoin, very happy to see a healthy correction here.”